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This is fascinating stuff, Stephen.

One thing that seems odd to me is your figure on real wage gains. According to Statscan, average weekly wages in constant dollars grew by -0.8% in 2003, 0.7% in 2004, 1.3% in 2005 and 1.4% in 2006. Early year-over-year figures for 1Q 2007 are all well under 1%.

Andrew Jackson has some more details on this on RPE today:

One other thing is that if labour productivity only grew by 4% since 2001, while wages grew by 8%, that would imply that wages as a share of GDP have been growing. In fact we have seen the exact opposite, as corporate profits have grown to record highs.

The factor share point is interesting; I'll have to think about that. For now, I'll just clarify where that graph came from.

The nominal wage series is 'Wages, salaries and supplemental income' (Cansim series V1996473) divided by hours worked (v4391505). These are monthly data, and the series in the graphs are the quarterly averages, divided by the quarterly averages for the CPI.

I also looked at the business sector series for hourly compensation (V1409158) and got a graph that looks pretty much like the one for the broader measure for the current expansion. The only difference is that in the other two expansions, the business sector real wage shows some growth near the end of the window.


Remembering David Foot's lectures on demographics from undergrad, is the different factor on real wages labour force growth?

ie in 1980-90 you had the Baby Boom entering the labour force. This, arguably, repressed real wage growth through much of the 80s.

I remember DKF showing a graph in class that showed that youth unemployment in Canada was never higher than it was in 1981.

1991-01 this wouldn't hold up (unless immigration really picked up?). However the 1990 recession was the most severe in postwar history, and so it's at least credible (I would guess) that this meant labour market conditions were unusually slack, for an unusually long time?

Also this was the period of NAFTA, so that could have had a downward impact on real wages, as Canadians (with lower productivity) adjusted to competing with Americans (higher productivity) and Mexicans (much lower wages). Again the problem with that thesis, in and of itself, I suppose, is that the Chinese are a factor this time, at least as great on a (smaller) Canadian manufacturing sector as NAFTA.

Sorry a little of a ramble here, but LF entry would be my obvious first thought.

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